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Weekly Outlook of Financial Markets for May 20-24

May 19, 2013

During the previous weeks the leading “risk related currencies” such as Euro and Aussie dollar tumble down against the USD; commodities prices including gold, silver and oil fell while equity markets rallied. This upcoming week the market volatility might pick up considering the many news items and events that could stir up the markets. Next week several reports, speeches and publications may affect the financial markets. These include: minutes of the FOMC meeting, Bernanke’s testimony, U.S core durable goods, ECB President’s speech, China’s manufacturing PMI, U.S existing home sales, EU flash manufacturing PMI, UK GDP for Q1, Bank of Japan’s monetary policy meeting, German climate survey, Canada’s retail sales, U.S new home sales, and U.S. jobless claims. Here is an economic outlook for the week of May 20th to May 24th regarding the U.S, Euro Area, China, Japan, Canada, Australia, and Great Britain.

(All times GMT):

Monday, May 20th

00:30 – Minutes of Reserve Bank of Australia’s Monetary Policy Meeting: The minutes of the recent monetary policy meeting of the Reserve Bank of Australia may provide some insight behind the decision of board to cut the basic interest rate by 0.25pp to 2.75%; the minutes of this meeting may affect the Australian dollar and consequently commodities prices including oil and gold;

Tuesday, May 21st

09:30 – GB CPI (April 2013): This report may affect the direction of the British Pound currency. In the latest report regarding March 2013, the CPI remained unchanged at an annual rate of 2.8%;

Tentative – Bank of Japan – Rate Decision, Outlook and Monetary Policy Statement: Bank of Japan will publish its interest rate decision, monetary policy for June and its outlook of the Japanese economy. In the past several weeks the Japanese yen tumbled down against the USD and Euro. If BOJ will further expand its current asset purchase program, this could drag down the Yen even further;

Wednesday, May 22nd

09:30 – Minutes of MPC Meeting: in the recent MPC meeting, the Bank kept the rate flat at 0.5% and the asset purchase program at £375 billion; the MPC still has concerns regarding GB’s inflation. The minutes of last week’s meeting might offer some perspective regarding its monetary policy;

09:30 – GB Retails Sales (April 2013): This report will show the changes in the retails sales in Great Britain for April 2013. It may affect the path of the British Pound currency. In the previous report regarding March 2013, retails sales fell by 0.7%;

Tentative – German10 Year Bond Auction: the German government will issue its monthly bond auction; in the previous bond auction, which was held at the middle of April, the average rate reached 1.28% – the lowest rate this year (UTD);

11:00 – SNB Chairman Jordan’s Speech: the Swiss National Bank Chairman will give a speech; if he will announce or imply of any developments to the monetary policy of the SNB it could affect the Swiss Franc;

13:30 – Canada Retails Sales (March 2013): This report will refer to the retails sales in Canada as of March. It may affect the USD/CAD currencies pair, which is strongly linked with commodities rates. In the recent report regarding February 2013, retails sales increased by 0.7%.

15:00 – Bernanke’s Testimony: Bernanke will testify this time before the Joint Economic Committee, U.S. Congress. The title of the speech is “Economic Outlook “. Bernanke’s testimony could stir up the market mainly precious metals markets;

15:00 – U.S. Existing Home Sales: This report will pertain to the shifts in U.S. existing home sales for April 2013; in the previous report regarding March 2013 the number of homes sold slightly declined to a seasonally adjusted annual rate of 4.92 million houses; if this trend will continue, it might pressure down the U.S dollar;

15:30 – U.S Crude Oil Stockpiles Weekly Update: the EIA (Energy Information Administration) will publish its weekly update on the U.S oil andpetroleum stockpiles for the week ending on May 17th; in the recent update for May 10th, stockpiles increased again by 2.6 ml bl to reach 1,798.3 ml bl.

19:00 – Minutes of April-May’s FOMC Meeting: Following the April/May FOMC meeting, in which the Fed left its monetary policy unchanged, this news had little effect on commodities prices and forex markets. If the minutes will reveal the Fed’s intentions to consider easing down its asset purchase program in the next several months, this could drag down precious metals prices;

02:45 – China flash Manufacturing PMI: this index is based on a survey of 800 companies in 20 industries in China; as of the recent the HSBC Manufacturing PMI survey regarding April 2013 the Manufacturing PMI slipped to 50.5; this index indicates the growth in China’s manufacturing sectors; if the index will continue to fall, this may adversely affect commodities rates;

Thursday, May 23rd

09:00 – Flash German, French and Euro Zone Manufacturing PMI: In the latest monthly report regarding April 2013, the German PMI declined again to 47.9 i.e. the manufacturing conditions are shrinking at a faster pace. This report serves as an indicator to the economic changes of the Euro Area’s leading economies’ manufacturing conditions; this news, in turn, may affect the Euro/USD currency pair and consequently commodities prices;

09:30 – Second GB GDP Q1 2013: This report will present the second estimate of the quarterly growth rate of the Great Britain economy during the first quarter of 2013; in the third quarter the British economy contracted by 0.3% (Q-2-Q);

13:30 – U.S. Jobless Claims Weekly Report: this weekly report will refer to the changes in the initial jobless claims for the week ending on May 11th; in the previous report the jobless claims rose by 32k to reach 360k; this forthcoming weekly report may affect the path of U.S dollar and consequently commodities and stocks markets;

15:00 – U.S. New Home Sales: This report will pertain to April 2013; in the recent report (opens pdf; for March), the sales of new homes slightly rose to an annual rate of 417,000 – a 1.4% gain (month over month); if the number of home sales will continue to rise, it may indicate a sign of a recovery in the U.S real estate market, which may also affect the USD.

15:30 – EIA U.S. Natural Gas Storage Update: the EIA weekly report of the U.S. natural gas market will refer to the latest developments in natural gas production, storage, consumption and prices as of May 17th; in latest weekly report, natural gas storage rose by 99 Bcf to 1,964 Bcf;

20:30 – ECB President Speaks: Mario Draghi will give a speech at an event organized by Lord Mayor, in London; the title of the speech is “The Future of Europe in the Global Economy”. If Draghi will provide some insight behind the future steps of the ECB’s monetary policy, this speech could affect the Euro;

03:55 – Kuroda’s Speech: Bank of Japan Governor will give a speech at the “Asia’s Search for Steps towards Stronger Ties and Integration” conference, in Tokyo;

Friday, May 24th

09:00 – German Business Climate Survey: This survey estimates the developments (on a monthly basis) of the business climate of Germany as of May. In the recent report for April 2013, the business climate index fell from 106.7 in March to 104.4 in April; if this trend will continue, it might pull down the Euro.

13:30 – U.S Core Durable Goods: This report will refer to the changes in U.S. orders of durable goods in the manufacturing sector for April 2013. This monthly update may indirectly indicate the developments in U.S. demand for commodities such as oil and gas. As of March 2013, new orders of manufactured durable goods decreased to $216.3 billion; if this report will present another drop in new orders then it could pull down not only the USD but also commodities prices;